A common issue in New York divorces that often results in particularly lengthy and brutal litigation is where there is a serious dispute over how much money someone is earning. Often, after a divorce is commenced, the supporting or monied spouse’s income suddenly takes a huge drop. They are claiming that they earn less. They can’t afford maintenance, they can’t afford child support. There are no assets to divide up anymore. While in challenging economic times this can truly be the case, often, the party who has suddenly lost everything is probably hiding assets or income. This phenomenon is known as Rapidly Acquired Income Deficiency Syndrome, or R.A.I.D.S..
If you are getting divorced in New York and either see your spouse suddenly “suffering” from this ailment or genuinely have had a drop in income and are concerned that your ex is going to claim that you are hiding funds and assets that you actually lack, here are some important things to look for or show that you do not have (and to make sure that you discuss with your lawyer or attorney, and make sure they bring up during litigation). These items, as listed below, are R.A.I.D.S . red flags.
- The monied spouse owns a business.
If your ex owns a business, it can be fairly easy for him or her to move funds around or hide certain expenses in that business, especially if that business is primarily located or has offices outside of New York. A business owner can also receive income as an employee, an owner, and investor, and through many other roles. This can allow them to make adjustments showing a rapid decrease in income. This can include cutting down the claimed profitability of that business. If this occurs, it is imperative for the less monied spouse to make sure their attorney works with them to gather evidence that the business is either more profitable than the owner spouse is claiming, or that they are deliberately taking action to cut down on the amount of earnings the business is providing. Conversely, if you are the owner spouse, it is important to have your lawyer or attorney help you gather evidence to show that the drop in business and income is not only real, but that the decrease in profitability is through no fault of your own.
- The monied spouse has cash income.
If your ex receives most of their income in cash, they may be able to manipulate with ease how much they claim they are actually earning. Therefore, if there is little documentation of your spouse’s cash earnings, it is important to have your attorney either themselves or with a qualified financial professional do a lifestyle analysis to show that your ex cannot be maintaining their existence on the small amount they are claiming to earn in income. This is especially the case in New York City and the outer boroughs, where there is a notoriously high cost of living. On the other hand, if you have cash income and your spouse is claiming you are maintaining a lifestyle beyond your means, speak with your lawyer or attorney to show that you are taking loans or putting expenses on credit cards to maintain your standard of living. Additionally, if you have cash income, document everything.
- Where the monied spouse has been removing amounts from marital accounts or keeping separate accounts that they deny the less-monied spouse access to.
Another red flag is where your ex has been siphoning off funds from your joint assets (even predating the divorce) or accounts suddenly have a huge drop in their balance. When this occurs, it might mean that the monied spouse has set up other bank accounts outside of New York (or even the United States) in a bid to have lower support or maintenance payments and hide away what constitute marital assets. If your ex has always maintained separate accounts with money earned during the marriage, this can also show they have been “stashing” income away. Therefore, if you see this sort of behavior, bring it to the attention of your lawyer or attorney, because under New York law, there is equitable distribution, meaning outside of a pre or postnuptial agreement stating otherwise, you are entitled to a percentage of ALL earnings or assets obtained during the marriage. On the other hand, if you are the spouse who moved the money, it is important to have your lawyer or attorney show exactly what it was used for and that you were entitled to use those funds for whatever purposed they were used for under New York law. Or, if the assets are separate, to have your lawyer or attorney establish that they are not subject to New York’s equitable distribution rules.
Overall, R.A.I.D.S. is a common issue in New York divorce cases, and a good New York divorce lawyer or attorney will speak to you about these red flags and what you need to do to establish---or refute claims of hidden or unreported income. However, it is important to be aware of the signs as well, to make sure that you get what you are entitled to under New York Law, based on what you or your ex TRULY earns.